Domestic economy grows 3.1% in first six months of the year as Tánaiste says figures show 'ongoing resilience'

CSO says GDP up 10.2% in Q2 but domestic economy contracted

Tanaiste Simon Harris said Ireland's economy is showing 'resilience'.  Picture: Niall Carson/PA Wire

Ireland's domestic economy has grown by 3.1% in the first six months of the year despite falling back 0.8% in the second quarter of the year,  according to the CSO. 

The Quarterly National Accounts and International Accounts show that Modified Domestic Demand (MDD), which measures underlying domestic activity in the economy, contracted by 0.8% in the second quarter of 2026. However,  MDD growth for the first quarter (January to March) was revised up to 1.7% from 0.3%, which left growth 3.1% higher for the first six months of the year compared to 2025.

The drop in the second quarter was driven in a large part by weaker building and construction. 

Ireland's Gross Domestic Product (GDP) grew by 10.2% in April, May, and June, fuelled by growth in the multinational-dominated sectors of the economy. The globalised Industry sector expanded by 22.1% in Q2 2026 compared with Q1 2026.

"There was a mixed picture for the domestic economy in Q2 2026," said the CSO's Chris Sibley.  "Personal spending increased by 1.0%, compensation of employees rose by 1.3% while the domestic sectors grew by 0.7% over the same period. Modified domestic demand (MDD) decreased by 0.8% in Q2 2026, driven by a decline in investment. However, looking at the first six months of the year, we can see that MDD grew by 3.1% with personal spending increasing by 2.8%.”

 Tánaiste and finance minister Simon Harris said the CSO data points  to "ongoing resilience in the domestic economy", noting that on an annual basis, MDD  increased by 1.75%, compared to Q2 2025.

"While quarterly figures can be volatile, annual growth of circa 3% over the first half of this year confirms continued momentum in the domestic economy," Mr Harris said.

 Ireland's balance of trade - all goods and services exports less all goods and services imports - stood at €61.8bn, an increase of €693m in Q2 2026 over the same period in 2025.

Thomas Pugh, chief economist at leading audit, tax and consulting firm RSM Ireland said: "We would caution against reading too much into falling MDD in Q2. Intangible investment is incredibly volatile and heavily influenced by multinationals as well as the AI buildout. What’s more, MDD growth in Q1 was revised up from 0.3% to a whopping 1.4%. Smoothing through that volatility gives quarterly growth of 0.3% per quarter in H1, which was in line with our expectations.

“Ultimately, growth will still be a little slower this year as higher energy prices, ECB rate hikes and a spike in global uncertainty all drag on activity, but the domestic economy is still much stronger than the rest of Europe and the government has the fiscal space to provide generous energy supports to households and firms, so we expect the broad trend of Irish outperformance to continue in 2026.”